Misconceptions about the Cost of Consuming IT in Your Data Center

With HPE Flexible Capacity, you get the best of both worlds—the agility and low cost of the public cloud with the security and performance of on-premises IT—so you can rapidly support changing business needs.

IT consumption is all about acquiring, paying for, and using technology to drive business outcomes based on actual usage. The approach enables your business to align payments to business outcomes in order to make informed decisions.

Say your business finds a new way to expand. The competition probably will come up with a similar idea, so getting there first will make or break the success of your initiative.

With IT that is consumption-based, you can turn on additional capacity right away, develop the new features needed, go into production as soon as you’re ready, and pay for what you’ve used. If the business takes off, your IT costs will map to your success. If not, you can scale it back and your IT costs scale back too.

Costs in line with public clouds but with more control, more freedom, less risk

The consumption-based IT model provides the ability to consume IT instead of purchasing it up front—with greater ease, based on current, anticipated, and quickly changing business needs. But many businesses hold off on deploying this model because they incorrectly assume it costs more in the long run compared to public cloud platforms.

A study conducted by 451 Research has deflated this misconception. Its analysts determined that a virtual machine delivered on a private cloud managed through an IT consumption program generates roughly the same TCO as one delivered from the public cloud. More importantly, a consumption program delivers the benefits of a self-managed private cloud—more control over applications and data—while also enabling the benefits of a public cloud, which includes scalability, usage-based cost and simpler IT operation.

The impact of variable cash flows on the business is significant. Without the requirement to source a large outlay up front, you are more free to experiment, try solutions, or explore a new customer segment. Without a large penalty for failure, you take on less risk. And the cash flows will give you a better picture of the ROI of a project, whether measured by pay back, IRR, or NPV.

Agility and low cost of public clouds with the security and performance of on-prem IT

HPE Flexible Capacity is a consumption-based infrastructure service that offers on-demand capacity, combining the agility and economics of the public cloud with the security and performance of on-premises IT. With a pay-as-you go cost model and the flexibility of on-premises IT resources, you get the best of both worlds along with the ability to scale up and rapidly support changing business needs.

Your business also benefits from the HPE Pointnext services team, which serves as an extension of your IT team to plan your needs and help you operate your hybrid IT environment. With HPE Flexible Capacity, you can align cash flow to actual capacity usage and benefit from other key capabilities:

On-premises IT—Receive support on your choice of on-premises equipment that’s owned by HPE.

Consumption-based IT payment model—Pay only for what you use based on metered usage, above a minimum commitment.

Active Capacity management—Access self-service reporting to forecast future needs and work with the HPE team to add capacity before it’s needed.

Scalable and flexible IT infrastructure—Gain an extra capacity buffer placed on-premises, ready to use and paid for when you use it.

The consumption-based IT model compares favorably in cost to a self-managed private cloud, where peak capacity is provisioned from day one. According to the 451 Research report, a virtual machine delivered via HPE Flexible Capacity is 29% less expensive. And because HPE Flexible Capacity manages capacity, utilization can be improved by ensuring there is capacity available for new requirements, without wasting money on unused servers, storage, networking. This reduces the risks of downtime, poor performance, delayed projects, and wasted budgets.

Velocity of change requires flexible IT approach

Understanding this new approach to acquiring, paying for, and using technology to drive business outcomes is critical. The velocity of change in business demand and market offerings requires a flexible IT approach that adapts to shorter, more iterative planning cycles. The ability to map investments to a technology strategy can pay dividends, by accelerating transformation and by providing that extra degree of flexibility to adjust to more frequent business disruptions.

To find out more about the IT consumption-based model and the benefits it can deliver for your business, we invite you to read our white paper, What Is IT Consumption?